Interest Continues to Decline in Fed Liquidity Programs

Borrowing against asset-backed commercial paper held by money market mutual funds fell to zero for the first time on Wednesday, making it the latest liquidity program by the Federal Reserve Board to no longer attract borrowers.

Since May, the central bank has not lent money under the primary dealer credit facility, which was designed to lend to investment banks. Other programs, including the Fed’s cash auctions and commercial paper purchases, are declining as credit markets rebound.

Meanwhile, lending through the Federal Reserve Board’s discount window grew less than half of 1% during the past week, to $111.8 billion.